TaxTMI 
TaxTMI 
2019 (4) TMI 1621
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....ect in not treating M/s Multi Screen Media Pvt. Ltd. (MSM India as Permanent establishment of the assessee in terms of Article 5 of Double Taxation Avoidance Agreement between India an Singapore? c. Whether on the facts and circumstances of the case and in law, the ITAT erred is not appreciating that the assessing officer has correctly assessed as distribution receipt as 'Royalty Income'?" 3. Question Nos.a and b arise in following background. Respondent-assessee is a Singapore based company engaged in the Telecasting of Channels in the Indian subcontinent. The assessee operates through a local company called Multi Screen Media Private Limited. The assessee contends that said Multi Screen Media Private Limited is not a dependent agent which the revenue disputes. Question (a) raised by the revenue relates to the advertisement revenue and distribution revenue generated out of such activity by the assessee. The revenue wishes to tax such income of the assessee in India on the ground that the assessee has a permanent establishment in India. 4. It is undisputed that in case of this very assessee, such a question had come up for consideration before this Court in case o....
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....ent has also made a reference to the earlier assessment proceedings of this assessee. It appears that in the earlier occasion the Commissioner (Appeals) had held that the payment of distribution charges, cannot be termed as payment for copyright, but can at best be a business income. We notice that on earlier occasions the Tribunal had considered a similar issue which was framed as under : "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the Assessing Officer has correctly treated the distribution receipt as 'Royalty Income'?. The Tribunal had dealt with this issue, by making an extensive reference to the order of CIT (Appeals). Relevant portion of this judgment of the Tribunal dated 28th August, 2015 reads as under : "7. Regarding distribution revenue also, the Ld. CIT (A), though discussed the issue in detail that it is not "royalty", decided the issue in favour of the assessee, following the past history of the assessee from assessment year 1999-2000 to 2004-05, wherein this issue was decided in favour of the assessee. The relevant observation and finding of the CIT (A) is as u....
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....pyright. The assessee is no way concerned whether the programs broadcast by the Non-resident company are copyrighted or not. The said distribution is purely a commercial right, which is distinct from the right to use copyright. We observe that ld. CIT(A) has considered the provisions of Section 14 and Section 37 of the Copyright Act, 1957. It is observed that Section 37 of the Copyright Act deals with Broadcast Reproduction Rights (BRR) and same is covered under Section 37 of the Copy Right Act and not under section 14 thereof. We observe that ld CIT (A) has also considered Clause 6.3 of the distribution agreement entered into between assessee company and Nonresident company, which states that the right granted to the assessee under the agreement is not and shall not be construed to be a grant of any license or transfer of any right in any copyright. Ld CIT(A) has stated that the assessee submitted before him that the cable operator only retransmits the television signals transmitted to it by a broadcaster without any editing, delays, interruptions, deletions or additions and therefore payment made by the assessee to the Nonresident company is not for use of any copyright and conse....
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...., except where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) a person who is non-residnet, where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India:" Explanation 2 below subsection (1) of Section 9 describes the term "royalty" for the purpose of said clause, relevant portion of which reads as under: "Explanation 2.For the purposes of this clause, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains")for" 13. In our opinion, these provisions would in no manner change the position. Only if the payment in the present case by way of a royalty as explained in explanation (2) below subsection (1) of Section....